ROBERT COSTA: President Trump ends the year defiant, but challenges loom.

I'm Robert Costa.

From the Russia probe to immigration, the president and party leaders prepare for next year, tonight on Washington Week.

PRESIDENT DONALD TRUMP: (From video.)

We are transferring power from Washington, D.C., and giving it back to you, the people.

(Cheers, applause.)

From this day forward, it's going to be only "America first."

(Cheers, applause.)

ROBERT COSTA: In the months since Donald Trump was sworn in he has signed into law sweeping tax cuts, appointed a new justice to the Supreme Court, rolled back regulations and upended global order.

As commander in chief, he has overseen gains against ISIS in Iraq and Syria.

But with each passing month, Trump faces a possible nuclear confrontation with North Korea.

PRESIDENT DONALD TRUMP: (From video.)

"Rocket Man" is on a suicide mission for himself and for his regime.

ROBERT COSTA: Protests have tested the White House and the nation.

PROTESTERS: (From video.)

No Muslim ban!

No Muslim ban!

ROBERT COSTA: Trump called out athletes who took a knee.

PRESIDENT TRUMP: - fired!

PROTESTERS: (From video.)

Jews will not replace us!

Jews will not replace us!

ROBERT COSTA: And outraged many Americans with his response to white supremacist marchers in Charlottesville.

PRESIDENT DONALD TRUMP: (From video.)

I think there's blame on both sides.

And I have no doubt about it.

And you don't have any doubt about it either.

ROBERT COSTA: The national reckoning over sexual assault and harassment allegations led to resignations on Capitol Hill.

And a year into his presidency, the Russia probe continues to hover over the administration.

We discuss it all with Amy Walter of The Cook Political Report, Shawna Thomas of Vice News, Carol Leonnig and Philip Rucker of The Washington Post, and Alexis Simendinger of The Hill.

ANNOUNCER: Celebrating 50 years, this is Washington Week.

Once again, from Washington, moderator Robert Costa.

ROBERT COSTA: Good evening.

President Trump did not hold an end of the year news conference, and that's been a presidential tradition.

But he did sit this week for a revealing and impromptu interview with The New York Times, which ended up becoming that sort of reflective and combative moment, all while sitting in the bustling Grill Room of the Trump International Golf Club in Florida.

Speaking with reporter Michael Schmidt, and without any aides present, President Trump criticized Attorney General Jeff Sessions for recusing himself from the Russia probe, and fired back at critics of the massive tax bill he signed last week.

He also defended his decision to endorse Roy Moore in the Alabama special Senate election.

And during that 30-minute interview, he repeated 16 times that there has been no collusion discovered by Robert Mueller's investigation, even though the investigation, of course, is ongoing and Mueller has resisted making any public statements on that or other matters.

What a conversation, what a year.

Phil, you've covered Trump for so long.

We've seen him in these kind of settings before - the president alone in his golf club.

This is who he is, talking to the press, no aides present.

He projected calm on the Russia probe.

Was that calm that came through in the Times interview, is that a reflection of the reality inside of the White House when it comes to the investigations?

PHILIP RUCKER: It's a reflection, Bob, of where President Trump thinks the investigation is based on what his lawyers have been telling him.

He's expecting some sort of end to the investigation into him personally, into possible obstruction of justice or any potential collusion.

And he's even been telling friends that he thinks he'll get some sort of public exoneration, a letter of some kind or a statement from Robert Mueller.

But that is not what those around the president think.

There's a heightened sense of concern within the White House and the administration and, frankly, within the Republican Party here in Washington about this Mueller probe, about the fact that Michael Flynn is cooperating now.

It's unclear where it's going to head in the new year, but it does not look to be wrapping up.

ROBERT COSTA: And some of it, Alexis, was hard to read.

When the president started talking about the Justice Department he said, well, I could do anything I want with regard to the Justice Department.

Was that a warning about possibly removing Mueller at some point or disrupting the investigation?

ALEXIS SIMENDINGER: Well, if you read the full interview, it doesn't come off as his trying to warn Robert Mueller about anything.

He's saying: I think he'll be fair.

But what he's suggesting is that his view of the power of the presidency is that his executive authority over the Department of Justice is absolute.

And, you know, he has heard from other attorneys, friends who have advised him that that's a particular perspective that they would advocate that he take.

But the other suggestion from looking back in the year is we've seen reporting that the president has explored things like pardons.

What - how vulnerable would my family members be if I wanted to pardon them or, for instance, Michael Flynn?

And he left that idea of pardons dangling not that many weeks ago, where he was suggesting, no, well, we're not going to talk about that right now.

We'll see, he said.

So the idea of his - and his still disturbance with Jeff Sessions, comparing him in some way in this discussion to Eric Holder, President Obama's attorney general, was very interesting and revealing, I thought.

ROBERT COSTA: It was certainly revealing.

And that point about Sessions, the president, Shawna, talked about how he values loyalty, how loyalty is everything.

And he said that he admired Holder for working in a loyal way with President Obama.

What kind of position does this put Attorney General Jeff Sessions in moving forward?

SHAWNA THOMAS: Well, I think it puts Attorney General Jeff Sessions in a position where it does help clarify once again how President Trump sees Attorney General Sessions and sees the Department of Justice, as apparently something to protect him and not necessarily to protect the Constitution or protect the law.

And I do think Attorney General Sessions sort of sees it as his job, sort of historically, is to protect the law and to protect the Constitution.

And he once again puts Jeff Sessions in a very hard position of having to go out and defend the president when he needs to, but also keep saying: The Russia investigation has to be separate from me.

It looks like he's never going to be able to get over this hump about recusing himself from the Russian investigation.

ROBERT COSTA: Amy, what's your read?

You're such an expert reader of the political winds in this country.

How does President Trump's base see this interview - his stance in this interview, when it comes to his calm about the Russia probe?

Because elements on the right are spoiling for a fight right now when it comes to Mueller, but the president seems to be resisting engaging on that front.

AMY WALTER: Yeah.

The real question, Bob, is what is President Trump's base?

And so I think there are two pieces of his base.

There is the base, those kinds of people that show up at the rallies, the ones who read interviews like this and say, that's right, go get them.

We stand with the president.

This is a witch hunt.

I don't believe there's been any collusion either.

This is all fake news.

And then there's the other piece of the Republican base, the people that voted for Donald Trump in 2016, who weren't crazy about him necessarily, who were maybe a little turned off by his temperament, by some of the statements that he made on the campaign trail.

But they decided either, one, he was better than Hillary Clinton.

They couldn't bring themselves to vote for her.

Or, two, that he was going to shake things up.

And that's really what they wanted to see, was somebody who was from outside of Washington, who was going to come in and change the culture of Washington.

And what we've seen, really, is there's been a great deal of chaos.

But it's not clear that it's the kind of chaos that they were looking for.

And so, when it comes to the fight over Russia, the more interesting thing I think in the campaign - and, you know, all of us go on the campaign trail.

I've sat down and talked to a lot of candidates, especially Democratic candidates who were running for the House this year.

None of them are talking about Russia.

None of them are talking about impeachment.

You don't hear it from voters, saying: I wonder what's going to happen with the Russia investigation.

It is sort of singularly an issue that is, like, taking over all of the oxygen in Washington.

Get outside of it, and it's just not something that is occupying a lot of folks' time.

ROBERT COSTA: So if that's the political reality out in the country, Phil, you wrote recently - it was a great story - about President Trump has passed the tax bill, but can he reset his presidency?

And you look at this interview with the Times, he's talking about bipartisanship.

Not always in clear ways, but he mentioned Senator Manchin.

He's been frustrated with the West Virginia Democrat for trying to work with him but not fully executing some of their conversations.

Whether it's on health care or immigration especially, could you see the president actually strike a deal on some of those issues next year?

PHILIP RUCKER: Potentially.

The first potential deal could be immigration.

They're looking to have some sort of deal to protect the DACA program that allows DREAMers to be here in the country legally in the next couple of months.

But also infrastructure, I feel like that's an area where potentially some of these red-state Democrats, Manchin from West Virginia, Donnelly from Indiana, Heidi Heitkamp from North Dakota, could join forces with Trump to pass an infrastructure bill.

SHAWNA THOMAS: But I think in 2018 we also have the issue of Democrats want to run against President Trump.

PHILIP RUCKER: They do.

SHAWNA THOMAS: And if it had gotten them a senator from the state of Alabama who is now actually the senator-elect, Doug Jones, from the state of Alabama, then I'm not saying they're not going to make a deal, especially on DACA and immigration issues, but they don't want to give him too many more wins because they want to run against him.

AMY WALTER: Except that I think for the red-state Democrats, they want to show and they know they need to show in their upcoming elections that they are not just against Donald Trump.

These are states that voted for Donald Trump by 20, 30 points or more.

So I think what you're going to see are folks who say yeah, we'd love to have bipartisanship - you hear this from Joe Manchin - I'd love to work with the president, but if this is what Republicans are going to give me I can't vote for this, this isn't good for the state.

ROBERT COSTA: Because they didn't vote with the president on the tax bill.

AMY WALTER: On the tax bill.

ROBERT COSTA: But maybe infrastructure?

SHAWNA THOMAS: Which is not a bipartisan bill by any means.

ALEXIS SIMENDINGER: But to Shawna's point, midterm years, in our experience, are mostly about drawing sharp contrasts.

They're not about deal-cutting unless there's an emergency or some outside external event.

And one of the foundational facts about infrastructure is, what is it?

The two parties do not define it as the same thing.

We have not seen the plan.

There is no agreement about the pay-fors, in other words the finances behind it, right?

The conservatives in the House do not want to spend.

They're even objecting to the president's proposal for $200 billion leveraged against 800 billion (dollars) to make a trillion (dollars), right?

And the president has changed his mind more than once since he first started talking about this early in 2017.

ROBERT COSTA: A Republican lawmaker once told me, Alexis, that Republicans see infrastructure as tax credits and Democrats see infrastructure as spending.

And there's this huge gap on what the word even means.

But I want to come back to immigration.

The president's saying I'll do a border wall in exchange for a DACA deal.

Is that something Democrats could buy or not?

Or is the wall, as the president talked about in this interview, is that more of a political point and a political dream of the president, but not part of the political reality?

AMY WALTER: It sure seems like a very difficult thing to get through a Democratic caucus.

Now, remember, you could still get five or six Democrats to go along with this, but you need 60 votes.

And even with, you know, some of those red-state Democrats, you're probably a couple of votes short.

The question is, who does a better job of playing their hand?

And the challenge I think for the president and his workings with Democrats is that they really don't know, the sands seem to be shifting constantly with him.

Right?

He'll come to one thing, right - he said, Nancy and Chuck, we got a deal on DACA, it's all - it's all good, it's all done, we agreed to it, and then 10 minutes later it's a whole new game.

ROBERT COSTA: What's your read on the White House side on DACA?

PHILIP RUCKER: Well, I think the White House - that Trump would like to do something on DACA, but he faces a lot of pressure from his base and including from some of his advisers, like Stephen Miller, inside the White House who want to see him hold true to a tough line on immigration, which he campaigned on.

SHAWNA THOMAS: But I do think there are some Republican senators, there's some movement on the Hill.

They want to do something.

This is a losing issue for them in terms of growing their - like, the base of the Republican Party and that whole thing.

So while they didn't feel the need to do it before the end of the year, which a lot of DREAMers would have wanted, they do feel that March pull coming because that's when DACA runs out.

ROBERT COSTA: What about health care, Alexis?

The president in this interview keeps talking about health care and having some kind of bipartisan plan, yet he just got rid of the individual mandate.

Is this the same kind of gap we're talking about where the president says bipartisan this, but Democrats aren't really onboard?

ALEXIS SIMENDINGER: Well, health care is so complicated into 2018 because you actually have a Senate majority leader who's allergic to the concept of dealing with health care again, right?

He has a deep abiding allergy to this for 2018.

You also have some senators who are talking about legislating on health care in a completely different way, which is to shore up the Affordable Care Act.

What can we do to rescue the premium support and the subsidies for the Affordable Care Act?

President Trump, however - and he used this when he signed the tax bill - did he talk about middle-class tax relief?

No.

He talked about how he was so proud that they had gutted and hadn't been talking enough about gutting the heart of Obamacare and that it was going to crater after that.

And in the interview, he also talked about a whole other concept that has to do with health care associations, which the rulemaking has not been written, it's not really in effect, but he was talking about, in a very garbled way, his hopes that this might be a foundation for improvement in health care.

So bipartisanship, I can't see where that is right now.

ROBERT COSTA: And she's talked - Alexis has talked about how Leader McConnell in the Senate has one view, he doesn't want to go after health care.

You have Speaker Ryan in the House, he's trying to go after federal benefits.

There's tensions within the Congress.

There's tensions with the White House and Congress about what's going to happen next year.

AMY WALTER: Absolutely.

And you know, their number-one priority right now is to take the one big legislative accomplishment they've had and try to sell it to the public.

Remember, it's not particularly popular, and even among Republican voters they're not as excited about it as Democrats are upset about it.

So they're going to have to spend a good amount of time sort of reselling, because they did a terrible job in the runup to voting for this, this tax bill.

Now, there's this assumption by Republicans that, don't worry, once people start to get, in February, start to see in their paychecks that they're getting some money back, it's all going to be good and well.

But I think that's some wishful thinking.

PHILIP RUCKER: And a big handicap for Trump on all of this next year is he does not have the American people behind him.

He's historically unpopular in his approval rating, he has been all year long.

He's governed as a disruptor, but he's also been a really divisive force.

And a lot of the country is against him.

And the problem in dealing with Capitol Hill is he does not stoke fear in the minds of Republican lawmakers there.

They don't feel that there's a consequence in defying him.

ROBERT COSTA: So what explains the calm in Palm Beach?

PHILIP RUCKER: He, you know - Donald Trump sometimes kind of lives in his own reality.

He thinks Russia has nothing to do with him and is all going to go away.

He thinks the news media is going to help him get reelected in 2020, as he said in the interview.

He had a new version of events in Alabama and how he supported Roy Moore and explained that in a strange way.

SHAWNA THOMAS: Well, and, as we're going to keep seeing, he has the ability to, as you said, make his own world and he will say whatever it is to basically back that up.

And the thing about his base is that - and you asked a really interesting question about, how does his base see this article, how does his base see that transcript?

A lot of his base isn't reading that transcript and isn't seeing that article.

And if there's something negative about him in it, that could be considered fake news.

So it's easy for him to create that world.

ROBERT COSTA: Well, you know, let's turn back to another issue, because it's not just the president at Mar-a-Lago, the president on vacation, it's the Russia issue and the domestic issues.

But I feel like this whole year we keep coming back to the Russia issue.

We talked a little bit at the beginning about that, and those headlines dominated all year.

Let's turn back to it a little more because this week we learned that the president's lawyers plan to portray former National Security Adviser Michael Flynn as a liar if he turns on the president.

And as you likely recall, Flynn pled guilty to lying to the FBI about his contacts with Russia's ambassador.

He was part of the Trump transition leadership and worked in the White House for less than a month before he was forced to resign.

Joining me now is Carol Leonnig, my colleague who broke the story for the Post.

Carol, the president keeps projecting calm when it comes to the federal investigation.

But what about his own legal team, especially regarding retired General Michael Flynn, the president's former national security adviser, and his cooperation with the probe?

CAROL LEONNIG: So it's a great question, Bob.

Both the president and his lawyers and lawyers for senior Trump administration officials, such as Jared Kushner and others in that sort of tier, have said they're really confident that there's going to be no evidence of collusion, that Michael Flynn has nothing to say that will be incriminating about any of their clients.

However, you can't be a very good lawyer if you're not planning for the possibility that there could be information or allegations that Michael Flynn might make that you aren't aware that he has at his disposal.

And you - you don't know everything that he's discussed with Bob Mueller.

He had a cooperation agreement signed December 1 that was very favorable to Michael Flynn, a big red flag that whatever he told the prosecutor was very valuable to his investigation into Russian meddling in the 2016 election.

ROBERT COSTA: Carol, what about the possibility of a pardon for General Flynn?

His own brother brought up the topic on Twitter then deleted the tweet.

CAROL LEONNIG: Yes.

His brother, Joseph Flynn, as I'm sure is true for many members of Mike Flynn's extended family - he's got a lot of siblings - are really feeling a lot of frustration.

They are disappointed that their brother is in this situation of being accused and ultimately pleading guilty to lying to the FBI.

And very recently, as you know, there's been a - there have been a lot of revelations about specific FBI agents in this investigation who may have been appearing to be very pro-Trump - I'm sorry, pro-Hillary Clinton and anti-Trump, and so there was this flavor in Joseph Flynn's request for a pardon saying, look, it's about time you give him a pardon, look at the corruption surrounding the FBI.

Now, he deleted that tweet.

It was very strident and demanding in its tone.

And he replaced it, minutes later, with one that was more polite and courteous, and making a polite request of the president and thanking him for his work.

ROBERT COSTA: You've been following the Mueller investigation so closely all year.

What do we know about where exactly things stand inside of this secretive probe?

Where are they going with the investigation?

What have you gleaned in your reporting?

CAROL LEONNIG: Well, you know, as you and I have reported together - so give yourself a little credit there - we looked very deeply into the Mueller probe about a month ago, and could tell how far ahead they were on specific sort of second- and third-tier members of the Trump campaign and Trump transition, and things they have done or appeared to have done that appeared criminal, and weren't really related to the issue of collusion with Russia.

Now we can see new wrinkles, new sort of waves on the water, if you will.

Very recently members of the RNC political campaign team have been questioned and asked for records by Bob Mueller's team.

And that suggests to me that though the White House wants to say this probe is nearly wrapped up as it relates to the White House, those requests suggest to me this is just the beginning of looking at and piecing together the social media campaign of the RNC, which was coordinating with the Trump campaign, and whether or not any of that was echoing the Russians' social media effort to disrupt the election, to sow seeds of distrust in our democratic process.

ROBERT COSTA: Speaking about the social media aspect of this, and Russia's role in the election using some of those platforms, how are the congressional committees looking into this matter going to move forward in 2018?

And how much are they working with the Mueller team to try to piece together that social media story?

CAROL LEONNIG: So I think if you pick up a little bit of the flavor of this, you'll see that the House and the Senate committees, they have their own different vibe.

Some more aggressive than others.

But they're not really working in tandem with Bob Mueller's team.

Bob Mueller's team is certainly the supreme being in the investigative corral.

And the congressional committees are trying to get what they can.

But there's also this political element to this.

You'll notice House Intelligence has a very big fight on its hands between the Republicans and the Democrats about whether they should wrap up their probe and be done.

Republicans leaning towards getting this done and over with, Democrats saying there's much more to figure out.

I think there's a gentleman's agreement between the congressional committees and Bob Mueller's, but Mueller really is the one that has the subpoena power that's stronger than anyone else's and can compel testimony.

ROBERT COSTA: And when it comes to the question of - everyone has on their mind, Carol, is: Will President Trump be called?

Will he be compelled to go meet with Mueller's team in the coming months?

He says there's no collusion, but is Mueller going to speak to the president, based on your reporting?

CAROL LEONNIG: It seems impossible for the president not to sit down for an interview.

That doesn't mean the president has done anything wrong, or that Mueller has found any evidence that he has.

But it seems impossible for Mueller to put together his investigation without questioning the person that was the head of the campaign, the transition, and ultimately the White House.

Remember, Bob Mueller has been looking at obstruction.

And we don't know whether or not he's put that to bed or not yet.

And certainly, you have to ask the president about, you know, the conversations he had with his own son about how he should explain a Trump Tower meeting.

One thing that we wrote about at The Washington Post was that meeting on Air Force One, or that confab where the president was guiding the explanation to the press about what that Trump Tower meeting was about.

And his first encouragement to his son was to not really tell the full story.

ROBERT COSTA: Carol Leonnig of The Washington Post, thank you very much.

CAROL LEONNIG: Thank you, Bob.

ROBERT COSTA: At the end of any year, I try to count my blessings.

And we're certainly doing that here at Washington Week.

And we thank, most importantly, our viewers, you, for watching this show each Friday night.

We appreciate it so much.

The staff here at WETA, they work so hard to put on this production.

Of course, our great guests, the reporters - the top reporters in the country come around this table to share what they know.

And of course, our supporters as well.

It's just really a privilege to be the moderator.

And we'll have a great 2018.

And thanks, everybody, for being here tonight at this table.

And don't go anywhere, because the Washington Week Extra is coming up next on most PBS stations.

We'll talk more about what has happened this year - wild year - and what it all means for next year's midterm elections.

And if you ever miss the live show or the webcast extra, you can find it online Friday nights and all weekend long at PBS.org/WashingtonWeek.

I'm Robert Costa, wishing you and yours a very healthy and happy new year.